UK Mortgage Calculator · Practical guide
Repayment vs Interest Only Mortgage: UK Comparison
See exactly how the two UK mortgage types differ in monthly cost and total interest.
At a glance
Repayment vs Interest Only: The Short Answer
On a £200,000 loan at 5% over 25 years, a repayment mortgage costs about £1,169 per month and roughly £150,800 in total interest, while an interest-only mortgage costs £833 per month but around £250,000 in total interest — and you still owe the full £200,000 at the end.
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Enter your own values, then compare the result with the examples below.
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Side-by-Side Example
Both calculations below assume a £200,000 loan (for example a £250,000 property with a 20% deposit) at 5% fixed for the whole 25-year term.
| Mortgage Type | Monthly Payment | Total Interest | Total Cost |
|---|---|---|---|
| Repayment | £1,169 | £150,760 | £350,760 |
| Interest Only | £833 | £250,000 | £450,000 |
How Each Type Works
A repayment mortgage uses standard amortization: each payment covers that month's interest plus a slice of the principal, so the balance reaches zero at the end of the term. An interest-only mortgage charges only the monthly interest — the loan balance times the monthly rate — so the balance never falls and must be repaid in full at the end, usually from savings, investments, or selling the property.
Which Should You Choose?
- Repayment suits most buyers: higher monthly cost, but guaranteed ownership at the end and far less interest overall.
- Interest-only lowers monthly outgoings and is common for buy-to-let investors, but you need a credible repayment plan for the principal.
Use the calculator above to run both scenarios with your own property price, deposit, rate, and term.
Frequently Asked Questions
Is interest-only cheaper than a repayment mortgage?
Monthly, yes — interest-only payments only cover the interest, so they are lower. Over the full term it is usually more expensive overall because the principal never reduces, so interest keeps being charged on the whole balance.
Can I switch from interest-only to repayment later?
Most UK lenders allow you to switch to a repayment basis or make overpayments, sometimes with an early repayment charge during a fixed period. Check your mortgage terms with your lender.
Who typically uses interest-only mortgages in the UK?
They are most common among buy-to-let landlords, who deduct the interest as a business expense and plan to sell the property to repay the principal. Residential interest-only mortgages require proof of a repayment strategy.
Does this comparison include mortgage fees?
No. The figures cover principal and interest only. Arrangement fees, valuation fees, and broker charges are extra and vary by lender.